In my article last month, “Tips to Building Wealth” November 2015, I provided important tips to building wealth. In the article this month I’m now going to discuss in more detail the importance of diversifying ones investment portfolio.

Why Diversify?

1. Diversification can help manage investment risk.
2. You may avoid costly mistakes by adopting.
3. Having a diversified portfolio with the proper asset mix, within your level of risk tolerance, will better insure meeting your financial goals.

How do you Diversify?

To get a properly diversified investment portfolio requires the help of a financial advisor. A properly diversified portfolio is customized to the investor -you! Your money is invested in specific percentages of investments, such as stocks, bonds, cash and others, that are diversified specifically to meet your:

• Financial Goals
• Time Horizon
• Tolerance for Volatility

Having the proper asset mix and the right percentage in each asset is the key to customized success.
And here is a word of caution: If you think by not investing your money, keeping it in cash or money market, you are avoiding risk – you’re not. Holding cash pays no interest and money market accounts pay less than one percent. Inflation usually goes up two percent or more each year. So you potentially are losing one percent or more a year. This is inflation risk. In five years you will have lost over five percent and if you are holding cash you will have lost 10%. Holding a portion of your assets in money market is usually recommended, but holding all your money in cash or money market for an extended period of time can be unwise.

So to repeat, maintaining and/or building your fortune and achieving your financial goals requires a customized and detailed plan. And once you and your financial advisor have finalized a plan, do not neglect the plan. Meet with your financial advisor quarterly, bi-annually or annually to update, rebalance and track your investment plans performance. Over time, as your life changes and evolves so will